Benefit Strategies
Understanding Your Executive Benefits
Creating executive benefit strategies can feel like trying to decipher a bowl of alphabet soup. What is a SERP? Which is more desirable, an LSRD or a REBA? Here are some common Executive Benefit Plans:
Supplemental Executive Retirement Plans (SERPs) are additional retirement benefits provided to select, typically upper-tier employees and are typically offered as cash-value life insurance policies. They allow high-earning employees to receive 401(k) matching benefits that IRS contribution limits typically prohibit. Although they don’t offer tax advantages to the company or the employee, they are an attractive retirement-savings vehicle for high-level professionals who plan to retire early.
Loan Regime Split Dollar plans (LRSDs) are a type of employer-sponsored life insurance. The company and recipient share the premium costs, cash value, and death benefits of a life insurance policy in what is essentially a loan: work performance in exchange for a low-interest rate life insurance policy. If performance metrics are met by the employee (along with other provisions regarding termination of employment or departure), the loan is “paid back” at retirement with a portion of the cash value or at death through a portion of the death benefit. These plans are attractive due to low interest rates and tax benefits.
Restricted Endorsement Bonus Arrangements (REBAs) are similar to LRSDs, except in this case, the company provides the funds to purchase a cash-value life insurance policy as a bonus that is taxable to the employee. Access to the cash value is restricted through a vesting schedule, making this a good option for those who intend to stay with their current company long term.
Disability Insurance (DI) is another executive benefit that may be offered. Group plans often cap disability benefits at 60% of an employee’s salary and $10,000 per month or less. With supplemental disability insurance, the difference between benefits and base salary is covered, providing for executives in the event of a covered injury or illness.
Choose a Balanced Strategy
Your executive benefits impact your retirement planning, taxes, and more. We believe in taking a holistic approach to your finances because we understand that every financial decision has ripple effects. Our goal is to help you understand your options, create a strategy that works for you, and move toward your goals, no matter which office or team you’re a part of. Whether you’re considering a career move or seeking to understand what you already have, we can help you understand how to make it all work together to get you where you want to go.
After our first meeting to understand your goals, priorities, and overall finances, we go over your executive benefits to explain what you don’t understand and create a strategy to maximize them. We collaborate with CPAs to ensure you make the most tax-advantaged decisions around withdrawals and gifting strategies and determine whether or not you should make quarterly payments, adjust withholdings, or pay taxes in April. We’ll also help you understand the financial implications of moving to a different company or staying, as well as negotiating benefits when transitioning. We’ll also help you create a comprehensive retirement plan that takes all of your finances into account.
Our Team, Your Priorities
The Balanced Wealth Group team is made up of compassionate and capable advisors holding certifications, including Certified Equity Compensation Professional and Chartered Retirement Planning Counselor. We’re passionate about your dreams and helping you alleviate daily stressors and pressure through comprehensive financial planning. With a firm focused on helping executives and professionals and offering personalized recommendations, you can count on us to provide the tools and guidance you’ve been looking for.
